Hello everyone,
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
nordanney schrieb:
About the same as for the apartment with €1,250 rent excluding utilities. With almost the same issues as a homeowner – plus rising rents. What problems would be the same?
A tenant isn’t under pressure from a bank for a roof over their head.
Also, additional construction-related costs and annual property taxes do not apply.
A tenant also saves on interest.
Just the interest on €400,000 would cover rent of $1,000 excluding utilities for 10 years.
The only costs a tenant faces are annual utility bill adjustments.
Rising rents are generally part of the overall increase in living expenses. My salary increases too.
And if the apartment doesn’t suit anymore, you can find another one—nicer, newer, bigger, or smaller.
Bardamu schrieb:
What problems would be the same?
A renter doesn’t have the bank pressing down for a roof over their head.
Also, additional construction costs and annual property taxes are avoided.
A renter also saves on interest payments.
With interest alone on $400,000, you can afford to rent a place for 1,000 euros (about $1,000) per month without utilities for 10 years.
The only extra costs a renter has to bear are annual utility bill adjustments.
Rising rents are usually part of general increases in living expenses. My salary rises as well.
And if you no longer like the apartment, you can simply find another one—nicer, newer, larger, or smaller. Are we really going to start the hundredth thread about whether renting or building a house is better?
Soon enough, we’ll be back to comparison calculations, and some will argue fiercely over assumed compound interest calculations and opportunity costs.
N
nordanney14 Jun 2019 21:12Bardamu schrieb:
A tenant doesn’t have a bank breathing down their neck for a roof over their head. But they do have a landlord who can raise the rent or declare personal use. You don’t have the bank breathing down your neck either – only if you don’t pay, then you also have the landlord on your back.
Bardamu schrieb:
There are also additional building costs. These are included in the rent.
Bardamu schrieb:
No annual property tax. It is included in the service charges.
Bardamu schrieb:
Just the interest on 400k alone would pay for 10 years of rent at 1000 Euro cold rent. For 400k, you currently pay about 670€ if you want 20-25 years of fixed interest. That’s somehow less than your cold rent.
Bardamu schrieb:
The only thing a tenant has to cover are annual additional service charge adjustments. Just like the owner.
Bardamu schrieb:
Rising rents are normally part of generally increasing living costs. My salary is rising too. Your mortgage payment doesn’t increase. So you can spend your rising salary on other nice things.
I just want to point out that as a tenant you’re not really in a different situation than as an owner. The big advantage of ownership is the forced savings. The owner is paying off their house or apartment. The tenant usually spends their money if they don’t have to save. Of course, the tenant can also save and if they do it cleverly, they might have more assets at retirement than the owner. But that’s the exception. It’s like with prepayment options on loans. Everyone wants them, but hardly anyone uses them (this is really true, we handle five-digit numbers of loan agreements every year and only a few percent of clients use their prepayment rights).
Renting or buying is basically an emotional decision that everyone must make for themselves. The difference is not huge though. You are flexible, but you have to plan more carefully.